Ahead of a virtual G20 Leaders Summit next month, the EU, along with 29 members of the Global Forum on Steel Excess Capacity (GFSEC), has called upon G20 leaders to address the massive global excess capacity in steel production.
“Even the COVID pandemic did not stop global excess capacity built up in the steel industry. In 2020 new steelmaking capacity is coming online despite existing excess steel capacity around the globe”, said Axel Eggert, director general of the European Steel Association (EUROFER). “Only the EU has significantly reduced capacity over the past decade, cutting by over 22Mt”.
According to EUROFER, this trend of reduced production capacity continues in 2020 due to third country steel trade distortions leading to closures and thousands of jobs losses in otherwise competitive, modern, and innovative EU steel companies.
Excess capacity leads to production of steel that is then dumped on global markets – particularly the EU’s – collapsing prices, costing jobs, undermining investment, and unnecessarily harming the environment.
“Work must continue to bring down this massive economic distortion. We, therefore, welcome the guidance and leadership the EU and the European Commission are demonstrating in the Global Forum on Steel Excess Capacity”, added Mr Eggert.
The EU’s call, jointly with the 29 other participating members of the GFSEC forum, comes less than a week after national and regional steel associations, including EUROFER, had urged the GFSEC to expand efforts to address the growing steel crisis.
“The COVID pandemic, and the ensuing public health measures, have caused damage across the global economy. In Europe, steel demand fell 25% in the second quarter of 2020 – and production was, at the peak of the restrictions, halved compared to normal levels. Up to 45% of the European steel workforce was on temporary unemployment or subject to shortened working hours”, added Mr Eggert.
“Meanwhile, other regions of the world continued to produce steel and continued capacity build-ups – volumes which will almost certainly target the EU’s open market once demand again picks up”, emphasised Mr Eggert.
Steel industries around the world have commended the commitments taken by the members of the steel forum to create transparency in regional market and capacity evolutions and review capacity increases based on the agreements expressed in the Tokyo Chair’s Report and recommendations set out in the Berlin and Paris Ministerial reports.
India, Saudi Arabia and China have declined to continue their support for the forum, the Ministerial Statement to G20 leaders notes. Nevertheless, work has continued, expanding on the previous achievements of the forum.
Recognising the challenges facing their steel industries, the 29 Ministers and senior government officials jointly recommend G20 Leaders consider: firmly maintaining the problem of excess capacity on the G20 agenda; promoting the GFSEC principles in tackling the problem; and supporting the GFSEC as a multilateral way forward.
“With the economic effects of the crisis becoming ever clearer, it is more vital than ever that global excess steel capacity is brought under control. EUROFER welcomes the joint call and the EU’s related comments”, concluded Mr Eggert.